My Worst Investment Ever Podcast

BIO: Brett Martin is co-founder of Kumospace, the virtual HQ for remote teams, and Charge Ventures, a pre/seed VC based in Brooklyn, NY.STORY: Brett started a company and got just 20% ownership; the rest went to investors who eventually walked away, leaving the business to crumble.LEARNING: If you’re in a partnership that’s not working, you must push it to a conclusion. Complaining won’t resolve your problems. If you can, bootstrap your company instead of taking money from venture capitalists. “A good business partnership is like a relationship. You have to like the person, respect and trust them.”Brett Martin Guest profileBrett Martin is co-founder of Kumospace, the virtual HQ for remote teams, and Charge Ventures, a pre/seed VC based in Brooklyn, NY. He also serves as Adjunct Professor at Columbia Business School, where he teaches data analytics. He loves you.Worst investment everBrett had just come off his first failed startup. He moved back to New York City, where his friend connected him with a job at an early-stage venture capital fund. The fund owners said they were looking to turn the fund into a venture studio, where they build and invest in companies. Brett wanted to start his own company, and he figured he might as well do it with the fund.The fund gave Brett a pretty lousy deal on ownership. He owned just 20% of the company he founded. He got funding of $150,000 for giving up 80% of his company. Brett took the money and got the company up and running. He built a proof of concept and started pitching to venture capitalists. A couple of venture capitalists loved his pitch and had another meeting with them. Brett was able to raise a million dollars in funding. He launched his company, and it was off to a good start. The business received 300 press mentions in six months.Brett had a problem, though. He had a totally fractured investor base. Some people had put in millions of dollars and owned 10% of the company. Others put in a couple of $100,000 and had 60% ownership. Brett had no control over his company, eventually bringing down the business.At the time, the company had millions of users, and Brett wanted to keep going and figure out how to make it work. Unfortunately, all the funding dried up, and all the investors walked away. And so Brett was scrambling to raise money just to keep the company afloat. He did that for six months until he finally got someone willing to recapitalize the company and start the whole thing again. All Brett needed to do was get his investors to agree to that deal. They wouldn’t take it, and the entire thing blew up. Brett and everyone who had invested in his company lost all their money.Lessons learnedIf you’re in a partnership that’s not working, you have to push it to a conclusion.Complaining won’t resolve your problems.If you can, bootstrap your company instead of taking money from venture capitalists.Lean on your legal counsel for advice on the best deal to take when building a partnership.As an investor investing in a business owner, always ask yourself if this is this someone you want to work with for the next ten years. If not, don’t give them your money.Andrew’s takeawaysIdentify your problems and solve them.Cash flow is your ultimate source of value.Actionable adviceThink long-term when forming partnerships. Don’t take the deal just because it’s there or because someone’s dangling money in front of you. Or just because you’re pressured to work with people you’re not excited about. Always hold out for people that you love and respect.Brett’s recommendationsBrett recommends checking out Stats For Startups, a platform for entrepreneurs who want to understand how to describe their SaaS businesses. You’ll find all the stats or metrics you need to value your startup.No.1 goal for the next 12 monthsBrett’s number one goal for the next 12 months is to lock down a long-term partnership deal he’s working on.Parting words “Be bold, be curious, and have fun.”Brett Martin [spp-transcript] Connect with Brett MartinLinkedInTwitterInstagramWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Damon Pistulka earned a Mechanical Engineering degree in college, then worked in technical and managerial roles, including designing, building, and operating facilities.STORY: Damon’s company focused on building a client’s business for sale. The client pulled out of a great offer at the last minute.LEARNING: Always have a contract in place and ensure it has an exit clause that protects you. Diversify to avoid concentration risk. “Always have an exit clause when leveraging your time against future value with clients.”Damon Pistulka Guest profileDamon Pistulka earned a Mechanical Engineering degree in college, then worked in technical and managerial roles, including designing, building, and operating facilities. Over the decades, he has led various businesses. Now, he helps owners build valuable businesses that they can sell when they want to.Worst investment everWhen Damon started his current company, it had what would have been considered a dream client. Damon and his team allowed that client to take up all their focus. The company got the client through the Exit Your Way process in the hope of exiting them with a very nice return.After about 24 months of work, the client just decided to stop. Damon and the client were sitting at the table one day with a buyer willing to pay them $10 million more than they’d initially asked for. The client just said no to the offer and insisted the business was worth more than that.Damon and his team had invested a lot of time into the sale. They had focused entirely on this client and had not built other clients up. Damon’s company was to be compensated with a portion of the exit proceeds from the sale. After the client refused the offer, Damon had to start his business over. It took him almost 12 months to get back after that.Lessons learnedAlways have a contract in place and ensure it has an exit clause that protects you.Help your clients understand what it means to have life-changing money in front of them and turn it down.Andrew’s takeawaysDiversify to avoid concentration risk.You’re going to have losses in the beginning.Don’t be overconfident when you get a good deal on the table; take it.Consider when it’s best to get compensated in the percentage of a transaction or the percentage of shares in a company.Actionable adviceMake sure you have an out clause in case someone wants to say no so that your business stays safe.Damon’s recommendationsDamon recommends checking out exityourway.com, where you’ll find many guides and videos.No.1 goal for the next 12 monthsDamon’s number one goal for the next 12 months is to see through a significant marketing content development project the company has been working on. He believes this project is going to transform the way that he does business.Parting words “Thank you for having me, Andrew.”Damon Pistulka [spp-transcript] Connect with Damon PistulkaLinkedInTwitterFacebookYouTubeWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

How rising rates and oil prices are contributing to 6.4% inflation in the USClick here to get the PDF with all charts and graphsWhat do you think: Are we headed for a recession or has the Fed engineered a soft landing?Jan. US CPI was up 6.4% YoY, continuing its slide from the June 2022 9.1% YoY peak, driven by high food and energy-related productsFood was up 10.1% YoY but continued its 5th straight month of slowdown, driven by food consumed at home was up 11.3%The energy component of CPI rose 8.7% YoY; Oil was $100/bbl in Jul-2022; it’s now down to $80bbl. Oil price is the driver; however, energy commodities prices were up only 2.8%, thanks to a slower oil and gas price riseAll other items excluding food and energy never rose as much and are coming down more slowly. This group benefited from negative used vehicle prices, but shelter costs keep it highOver the long term, energy, despite its small weight in CPI, drives consumer pricesPutin’s invasion of Ukraine was not the primary driver of inflation; instead, it was the oil and gas price rise in 2021 when post gov’t lockdown demand bounced backHome prices rose massively thanks to Fed’s nearly-free money, and soon could start contractingThe oil price fell 6.1% YoY in Jan, down from its Jun-22 high rise of 60.8%; disinflation is in full swingHome prices continued slowing from the July 2021 peak YoY change of 18%Key pointsJan. US CPI was up 6.4% YoY, continuing its fall from its 9.1% peak in June 2022The 6.4% level was kept high mainly by high food and energy pricesIt was a slight YoY slowdown compared to Dec-22, which was 6.5%Food was up 10.1% YoY but continued its 5th straight month of declineFood peaked in Aug-22 at 11.4%The 10.1% food price rise was driven by food consumed at home which was up 11.3%Though oil price has fallen, prior oil price shocks are still feeding into the food supply chainIn addition, food supply chains seemed to still be damaged by the US gov’t economy lockdownEnergy component of CPI rose 8.7% YoY, Oil was $100/bbl in Jul-2022, now at $80bblWhen you smooth price changes with a 12mma you see that oil price is the driverEnergy commodities prices were up only 2.8%, thanks to a slower oil and gas price riseEnergy services were up 15.6%, driven by the prior oil price spikes feeding throughAll other items didn’t rise as much and are coming down more slowlyThis component of CPI is slow to adjustThis is why a few months ago, when I last looked at US inflation, I mentioned that inflation was unlikely to come crashing downEx-food and energy items benefited from fall in used vehicle prices; shelter remains highPrice rises were low for Apparel (3.1%), New vehicles (5.8%), Used cars and trucks (Negative 11.6%), and Medical care commodities (3.4%)Energy, despite its small weight in CPI, seems to always drive consumer pricesDid Putin’s invasion of Ukraine drive inflation?Oil and gas prices started their rise in 2021 when post gov’t lockdown demand kicked onHome prices rose massively thanks to Fed’s nearly-free money, now falling to neg?Oil price has already moved to negative, it looks like disinflation is in full swingThe 2007 YoY housing price increase maxed at 10%; it peaked at 19% in July 2021 Click here to get the PDF with all charts and graphs Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Pia Singh is a Business Growth Strategist with 15+ years of experience in helping companies find ways to save on the bottom line and drive topline growth. She is a recognized Growth Strategist with excellent strategic planning capabilities.STORY: Pia invested a substantial amount of her wedding money in a friend’s business. She lost everything she had invested and had to take a loan to pay for her wedding.LEARNING: There are no shortcuts in investing; you must do your due diligence to succeed. Don’t make a rash investment decision without doing your research. Mistakes are inevitable, so be prepared. “We make bad decisions all the time, and that’s okay.”Pia Singh Guest profilePia Singh is a Business Growth Strategist with 15+ years of experience in helping companies find ways to save on the bottom line and drive topline growth. She is a recognized Growth Strategist with excellent strategic planning capabilities.She is a part of 2 World Records in Training and Business Growth and has authored four books on business startups and scaleups.Nowadays, Pia is applying years of experience to build a Brain Health Company - The MindSmith.Worst investment everPia was 29 and was supposed to get married in about three to four months. Her parents went on and on about everything they needed to do for the wedding. The wedding planning got out of hand and out of budget. Pia started thinking of what she could do to help her parents.One of Pia’s very good friends and her ex-colleague contacted her out of the blue and told her of a business she was building. The friend wanted Pia to be a part of it.Pia met her friend, who showed her the business plan. It looked like a beautiful plan. It was all on paper; the numbers were all there, and they were achievable. Pia believed the business would give her good money in the next three to four months—which she badly needed for her wedding.Pia pulled a substantial amount out of the funds kept for her wedding and invested in her friend’s business. Pia tried to apply all the processes to make money from the business, but four months later, she had not made any money. It was almost time for her wedding, and Pia didn’t have enough money saved. She had to take a loan to compensate for the funds she withdrew to invest in the business.Pia eventually gave up on the business and had to pay the bank loan out of pocket. Pia experienced a double loss; the amount she invested in the company and the interest she paid for the loan.Lessons learnedThere are no shortcuts in investing; you must do your due diligence to succeed.Before you invest in any business, talk to as many people as possible within that industry to see if this has been done before and if it’s viable.Pick the brains of the experts you have in your community so you can learn from their mistakes.Let the experts do their work if you lack expertise in a particular area.Andrew’s takeawaysDon’t make a rash investment decision without doing your research.Good things can happen to you through luck. But you can’t build a life around chance.Nothing good comes easy. And if you see something really good coming easy, start asking questions.Set up a process.Mistakes are inevitable, so be prepared.Actionable adviceDo your research because nothing speaks to success more than the efforts that you’ve put in. If you have experts around you, talk to them. If you don’t know about something, and you want to get into it, talk to at least 20 people from different geographies and directions who are involved with that sort of thing, who have tried it, to understand what it takes to succeed.Pia’s recommendationsPia recommends subscribing to her MindSmith LinkedIn page to access resources and monthly lives on various topics such as self-esteem. You’ll also find tips and tricks, so you don’t have to wait for an appointment with a doctor or an expert.No.1 goal for the next 12 monthsPia’s number one goal for the next 12 months is to build a task force across India that will ensure people are trained in primary healthcare so they can identify and refer people to get treatment before it gets out of hand.Parting words “Good judgment comes from experience, and experience comes from bad judgment.”Pia Singh [spp-transcript] Connect with Pia SinghLinkedInTwitterInstagramFacebookWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Raghav Kapoor is the CEO and Co-Founder of Smartkarma, an Asia-focused Investment Research Network that serves global institutional investors, corporates, and private wealth.STORY: Raghav invested 2% of his portfolio in a biotech company in the US simply because it was run by people he believed had a good reputation. He ended up losing 98% of his investment.LEARNING: Invest within your area of competence or expertise. Capital preservation and compounding are essential. Great people get it wrong too. “I try to get in early on an investment that I know is so simple that I can explain it in one sentence, and almost everyone would agree to it.”Raghav Kapoor Guest profileRaghav Kapoor is the CEO and Co-Founder of Smartkarma, an Asia-focused Investment Research Network that serves global institutional investors, corporates, and private wealth.Subscribe to Smartkarma Plus - Institutional Level Investment Insight for the Aspirational Investor at a special welcome offer of just $1.99 for the first month.Worst investment everIn 2021, Raghav had an excellent portfolio performance behind him. He got overzealous and invested in a US biotech company. There were a lot of things that looked really great about this company. For starters, the company had been operational for about 15 years. They were developing a new platform for cancer research and drugs, and the specific type of cancers they were trying to cure were called orphan cancers. These are cancers that affect a tiny percentage of the global population. But they’re almost always fatal. Because they affect such a small percentage of the population, the Big Pharma companies don’t have a big incentive to try and come up with medication.This company firmly believed it could cure some orphan cancers using hormone treatment. They had been doing this research for many years and had quite a bit of success. At some point, the company joined a more prominent group well-known in the US. The group had an impeccable track record and had taken a controlling stake in this business.In addition to the research that they were doing, the company was also sitting on a beautiful piece of real estate in downtown New York—that alone was worth almost 40-50 % of their market cap. Because most of the company’s value and revenue at that time came from that commercial real estate, it was misclassified in all the industries as a real estate company even though it was a biotech company. And so it used to trade at a discount to book value, whereas biotech stocks back then were trading at very rich valuations.The company hired a guy heading the oncology practice at Novartis, one of the largest Big Pharma firms. He joined as the CEO of this small company and went on to build a solid bench of illustrious managers and board members. The company’s first drug went into phase three trials. According to initial valuation, even the smallest of these drugs would generate about $5 billion per year of revenue stream. When you look at how these things are valued, you can get at least a two times revenue multiple because these are very high-margin businesses. So it looked likely that the company would get bought out even before the trial results came out.After analyzing all these factors, Raghav predicted that the payoff of this investment would be about a 5,000% return on the upside. He decided to put 1% of his portfolio into this investment. Raghav figured that if this led to that 5,000% return, he would get many times his entire portfolio back. And if it dropped 60%, that would shave off about 60 basis points from his book in a year when he was up 40% to 50% overall.The company did a small placement of $30 to $40 million. Raghav thought that was tactically very smart because such clinical trials are expensive. This placement brought in four or five pure healthcare investors, adding to the company’s credibility. The company also reclassified from real estate to healthcare, which would now unlock more value. The stock fell below the placement price, which had come at a discount. Raghav decided to double down on his position. So it went from being 1% to a 2% position.Raghav waited and waited for something good to happen and push the stock up. Then one day, investors woke up to the news that the phase three trials had failed by a vast margin (from $50 to $1). Raghav lost 98% of his investment.Lessons learnedWhen investing, don’t step very far out of your area of expertise or competence.It’s tough to get an excellent risk-adjusted return when you take bets outside your area of competence.Sizing and trading decisions have a tremendous impact on eventual returns or losses.Just because great people are involved in a business doesn’t necessarily make the business successful.Capital preservation and compounding are essential.Andrew’s takeawaysBe more cautious as you grow older and avoid high-risk investments.Great people get it wrong too. Don’t blindly follow them, as you don’t know their objectivesBe on high alert when your portfolio is doing great.Actionable adviceBefore investing, ask yourself if you know enough about this industry or space to have some edge. Do you have a really good feeling about this? When new information comes, you will learn how to process it quite intuitively.Raghav’s recommendationsRaghav recommends Smartkarma as the go-to resource for anyone focusing on Asian companies and looking for sound independent research.No.1 goal for the next 12 monthsRaghav’s number one goal for the next 12 months is to spend a lot more time grooming leaders within his company and meeting external stakeholders more. Raghav also wants to prioritize his health a lot more this year.Parting words “I’ve never stopped investing because I think it’s the biggest superpower that nobody teaches you in school. It’s also something you can do until the moment you die. So never stop investing.”Raghav Kapoor [spp-transcript] Connect with Raghav KapoorLinkedInTwitterYouTubeBlogWebsitePodcastAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

EM don’t have reserve currency status, unlike DM they never benefited from zero ratesOver the past 12 months, the World average 3mth gov’t bond rate rose from 1.7% to 5.0%That 3.3ppts rise highlights the rising interest rate environment we have been living throughIn the Developed markets 3mth rates rose from zero 12 months ago, before the Ukraine war started, to the current 3.3%Despite this strong rise, DM’s interest rates remained at a 1.7ppt discount to the world averageMeaning EMs were rising equally fastSo, let’s look at EMsOver the past year, 3mth rates rose from an already high 4.3% to 7.4%, up 3.1ppts, double the rate of DMs and a 2.4ppt premium to the World averageDM 10yr yield starting to fall, anticipating lower inflation; EM flat for a yearWorld LT interest rates rose from 2.8% 12 months ago to 4% today, a 1.2ppts riseDeveloped markets saw a YoY interest rate rise from 1.2% to 2.9%, up 1.7ppts riseDM’s discount to the world interest rates rose from negative 1.6ppts to negative 1.1pptsEM had a small rise from 5.1% to 5.6% YoY, a small 0.5ppts rise on an already high rateEM premium to world fell from 2.4ppts to 1.6pptsKey points & the bottom lineEM never had reserve currency status, so unlike DM, they never benefited from zero ratesSince rates have always been higher, borrowers in EMs have not had the same incentive to borrow as in the DMs; therefore, the balance sheet quality is strongUS led the rise, DM Europe is catching up, DM Pacific is now at a deep discount to world ratesDM Americas rose from 0.2% to 4.7%, up 4.5pptsIts relative discount to the world narrowed from negative 1.5ppts to negative 0.3pptsUS led the rise, DM Europe is catching up, Japan now at a deep discount to world ratesDM Europe rose from negative 0.4% to 2.5%, up 2.9pptsIts relative discount to the world widened from negative 2.1ppts to negative 2.5pptsDM Pacific rose from 0% to 1.1%Its relative discount widened from negative 1.7ppts to negative 3.9pptsDM Europe LT rates rose most aggressively from near zero, preventing a currency collapseDM Americas rose from 1.8% to 3.4%, up 1.7ppts; rel. discount narrowed from -1% to -0.6%But LT rates fell slightly in January showing the market believes inflation has been tamedDM Europe rose from 0.6% to 2.8%, up 2.2ppts; rel. discount narrowed from -2.1% to -1.2%DM Pacific rose from 0.7% to 1.4%, 0.7ppts; rel. discount widened from -2% to -2.6%Key points & the bottom lineUS led the rise, DM Europe is catching up, DM Pacific is now at a deep discount to world ratesDM Europe LT rates rose most aggressively from near zero, preventing a currency collapseImportantly, LT rates fell slightly in January showing the market believes inflation has been tamedClick here to get the PDF with all charts and graphs Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Praveen Kumar Rajbhar is an entrepreneur, founder, and CEO SkillingYou, an employability Skills Focused EdTech startup in rural India.STORY: When Praveen started his first startup, he spent money to hire many people, buy a lot of gadgets, and rent a huge office space. The business collapsed in less than two years.LEARNING: Get the right mentor to guide you on how to make your startup a success. You don’t need a big team to be successful. Get on-time and accurate financial statements every month. “Having the right mentor will help you create a great company.”Praveen Kumar Rajbhar Guest profilePraveen Kumar Rajbhar is an entrepreneur, founder, and CEO SkillingYou, an employability Skills Focused EdTech startup in rural India. It’s one of the top 100 promising startups ranked by Google and the Ministry of Electronics and Information Technology and is being incubated by Google, EdStart, Agora, and TiE.Praveen has worked for over 13 years in corporates such as Axis Bank, Home Credit, Amway, SBI Cards, and AU Bank.Worst investment everPraveen left his corporate job and started his first startup. Instead of controlling his expenses, Praveen hired more people than he needed, bought unnecessary gadgets, and rented colossal office space. In total, Praveen spent over $60,000 to run the startup. Being the family’s only breadwinner, he was soon in a lot of debt. The business collapsed in under two years.Lessons learnedMake sure that you understand your product before testing your market.People are your biggest strength as a founder and CEO. So surround yourself with the right mentors if you want to run a successful startup, don’t play it all alone.Work with a mentor in your industry or who has walked the path you want.Practical learning will give you strength and maturity, and you’ll know what not to do next.You can run a successful business with a small team.Andrew’s takeawaysA startup is a lifestyle.If you have a startup and are trying to grow it into something big, make sure you close your financial books monthly and have on-time and accurate financial statements.People want to help and are okay with sharing their experience and knowledge, so reach out.Actionable adviceBefore starting a startup, know your “why” because it will be a challenging journey, so you must understand why you want to do it. If you can’t do it for five years, don’t do it for five minutes.Praveen’s recommendationsPraveen recommends checking out the My Worst Investment Ever website to learn what successful people did wrong and learn from their mistakes.No.1 goal for the next 12 monthsPraveen’s number one goal for the next 12 months is to impact one million students with essential employability skills that will help them get a job.Parting words “Just love whatever you’re doing. Never give up; it’s going to be a beautiful world tomorrow for you.”Praveen Kumar Rajbhar [spp-transcript] Connect with Praveen Kumar RajbharLinkedInTwitterFacebookInstagramYouTubeBlogWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: Larry Swedroe is head of financial and economic research at Buckingham Wealth Partners.STORY: Larry chose to invest in an individual bank stock in the mid-80s instead of following his gut to invest in a portfolio of stocks. The bank’s President committed fraud, and the company went bankrupt. Larry lost about 80% of his investment.LEARNING: Avoid idiosyncratic risks by hyper-diversifying your portfolio. “Focus on managing risks and not trying to generate alpha or risk-adjusted outperformance.”Larry Swedroe Guest profileLarry Swedroe is head of financial and economic research at Buckingham Wealth Partners. Since joining the firm in 1996, Larry has spent his time, talent, and energy educating investors on the benefits of evidence-based investing with enthusiasm few can match.Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has authored or co-authored 18 books.Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television on various outlets.Larry is a prolific writer, regularly contributing to multiple outlets, including AlphaArchitect, Advisor Perspectives, and Wealth Management.Worst investment everIn the mid-80s, while Larry was working at Citicorp as the regional treasurer on the West Coast, his colleague and friend convinced him to invest in a company called Jefferson National Bank. Larry happened to believe in two themes that were behind his friend’s recommendation.One, this was a small regional bank, and Larry was confident that the US would allow consolidation to build national banks. So there was going to be a trend of purchasing well-run small banks at premiums to enable the big banks to become national.Two, the bank was located on the border between Canada and upstate New York. There was a military base with a good, sound community, making it suitable for businesses. Larry also believed NAFTA would pass, which would build up the trade in the area.Larry then called a bunch of friends in the banking business and asked them what they thought of this company. Most were impressed by how well the bank was run and the good earnings. Everything seemed suitable for an investor.The President of the bank committed fraud, and the company went bankrupt. Larry lost about 80% of his investment.Looking at hindsight, Larry could have made a much more intelligent bet by avoiding idiosyncratic risks. He could have found a collection of regional stocks with the same advantages as the bank he invested in but without the idiosyncratic risk.Lessons learnedLarry has, over time, developed three principles of investing:Principle one: If the markets are sufficiently efficient, invest in systematic, transparent, rapidly run funds that try to keep their trading costs down with patient trading.Principle two: All risk assets have to have very similar risk-adjusted returns.Principle three: Once you account for all risks, hyper-diversify your portfolio.Actionable adviceIf you need excitement from your life by trying to pick stocks and time in the market, take 1% of your portfolio that you’re willing to lose and go play the market. But don’t take your IRA account to the Merrill Lynch office because you’re more likely to lose it.Larry’s recommendationsLarry recommends reading his book, Investment Mistakes Even Smart Investors Make and How to Avoid Them, so that you can learn from others’ mistakes than make them yourselves. He also recommends books by John Bogle and William Bernstein.Parting words “Ignorance is not an excuse for making mistakes; the best thing you can do is get educated.”Larry Swedroe [spp-transcript] Connect with Larry SwedroeLinkedInTwitterWebsiteBooksAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

Never has the US gov’t caused such a massive move in GDP. The question is, “which way is GDP going?” Will we see a recession or a soft landing?Click here to get the PDF with all charts and graphsReasons for a recessionExtreme increases in interest rates are meant to slow down the economyThe fastest rate-hike cycle by the Fed since the 1980sIn the 2004 cycle, the target rate was hiked by 4.25% in totalSame as in the current cycle, but it has now been done much fasterThe massive rise in mortgage rates is dramatically slowing the property marketThis, in turn, leads to crashing prices, which will make people feel less wealthy and hold them back from spendingThe yield curve has inverted, which has perfectly predicted prior recessionsAll recessions in the US since 1968 were preceded by an inverted yield curveThe average time from inversion until the recession started was about 1 year (about mid-2023)The surge in spending supported by gov’t handouts is working itself out of the systemSince 2Q21, households have demonstrated stronger than usual spending behaviorStrong wage growth has contributed to more savings in 4Q21 onwardReasons for a soft landingHigh employment means the economy is robust and can withstand the rate hikesCompanies are highly profitable, which will allow them to bear a slowdown more easilyCompanies are sitting on tons of cashIndividuals slowed their spending in anticipation of an economic slowdownDemocrat party leadership will pump things up (e.g., strategic petroleum reserve)US banks are in a strong position, holding lots of cash and gov’t bondsReducing the risk of a financial sector crisis that would exacerbate an economic crisisAt the end of 2021, the banks had nearly 40% of their assets in cash and securitiesCompared to 13% at the end of 2007Gov’t spending is going to be crowded out by borrowing interest paymentsAnd then politicians will pressure the Fed to cut ratesClick here to get the PDF with all charts and graphs Andrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast

BIO: David Siegel is an entrepreneur who has started more than a dozen companies. He has written five books on technology and business, given more than 200 professional speeches worldwide, and was once a candidate to be the dean of Stanford business school.STORY: David joins the podcast again, this time around discussing climate change.LEARNING: It’s wrong to reduce climate change to a score. We need a better alternative to the UN’s Environment, Social, and Governance (ESG) movement. “You don’t have to do anything the way anybody tells you to. Go learn in the most irreverent way possible.”David Siegel Guest profileDavid Siegel is an entrepreneur who has started more than a dozen companies. He has written five books on technology and business, has given more than 200 professional speeches around the world, and was once a candidate to be the dean of Stanford business school. He is a fintech leader, a leader of the open Metaverse movement, a business strategy coach, and an advocate for the scientific method. He writes and makes videos about climate change at www.climatecurious.com.Worst investment everDavid is a previous guest who joined us on Ep98: Start-ups Should Start with Selling. In today’s episode, he tells us more about his research on climate change.David’s penchant for climate changeDavid has been conducting research on climate change since 1988. He wrote his first book on climate in 1991. So David is not one of those instant climate experts. In 2015, he decided to really dig into the subject and spent an entire year doing nothing but climate research. During this extensive research, David realized that many scientists don’t understand climate change fully and that many people take it at its face value. He believes people need to understand climate change on its own merits and not as an overarching cause and effect. For this reason, David digs deep into research to present raw data and help people make up their minds.In comes the UN’s ESG movementThe rigorous talks on climate change have metastasized into the global Environment, Social, and Governance (ESG) movement that has been forced on us by the World Economic Forum and the UN. ESG is a UN program strongly endorsed by the World Economic Forum and has been going on for 20 years. The point of ESG is to give every company a detailed scorecard of their carbon footprint, water use, energy, pollution, and other practices that affect climate change.Every public company in the United States pays $2 billion yearly for compliance, which could go to $8 billion. David believes this money is spent so the companies can get a high score regardless of their efficiency.Transparency is good; it’s just being done the wrong wayDavid believes that while we must have transparency where climate change is concerned, it’s not okay to reduce it to a score given by some consultants. He thinks the ESG scoring system simplifies a complex subject into a single set of numbers that don’t represent reality.Moreover, ESG scoring is done arbitrarily, based on political assumptions and a set of unclear rules by anointed consultants selling indulgences. According to David, coming up with one score on something is full of problems and creates terrible incentives. In this case, companies won’t be efficient with the goal of fighting climate change but simply get a good score. And with the amount of money companies are paying, it really comes down to paying for the ratings. So there’s a lot of conflict of interest in the ESG scoring process.The scoring will soon get personalCurrently, every US state and city must get an ESG ranking. David believes this will go further down to a personal ESG score. Soon, everyone will need to have a unique social credit score. This personal ESG score will be used to deny you access to financial services, rent, loans, how far and when you can travel, etc.Let’s build a better alternativeDavid believes that the idea behind creating ESG is good. Still, we need to build a better alternative that’s more objective and efficient. He also insists that people should use independent thinking to combat climate change at an individual level. David’s advice is to participate where it makes sense and know when to go with the herd and when to go against it.No.1 goal for the next 12 monthsDavid’s number one goal for the next 12 months is to build his Cutting Through The Noise platform.Parting words “Develop yourself and learn all you can. Podcasts like Andrew’s are really valuable. Don’t take anything from other people; find your own way. Look at the data, learn to interpret it, and ask difficult, irritating questions.”David Siegel [spp-transcript] Connect with David SiegelTwitterWebsiteBlogAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever PodcastFurther reading mentionedHans Rosling (April 2018), Factfulness: Ten Reasons We're Wrong About the World--and Why Things Are Better Than You ThinkTodd B. Kashdan (February 2022), The Art of Insubordination: How to Dissent and Defy EffectivelyGreg Satell (April 3, 2019), Cascades: How to Create a Movement that Drives Transformational Change